Various inventory replenishment processes are employed by businesses to fulfill orders and manage inventory. Although business use various types of replenishment processes (which are often customized for the business), some of the most commonly used processes are Vendor-Managed Inventory (VMI) programs, Supplier-Managed Inventory (SMI) programs and Just in Time (JIT) programs. In a VMI program, a vendor of products takes over the responsibility of managing the inventory of certain products for a given customer. Depending on the situation, the vendor might receive data such as forecasted demand, product consumption rates, inventory positions from the customer, and other inventory-related data. The vendor may also or alternatively be responsible for generating part of the data on the customers behalf. The vendor then uses the received and/or generated data to determine how much of the product to replenish and when such replenishment should occur.
In an SMI program, a seller negotiates with a sub-set of its suppliers to create supplier hubs dedicated to that seller (and which may be managed by a third party). As part of the negotiation, the third party and the suppliers agree to particular service levels at a hub, such as speed of delivery of replenishments of inventory and minimum and maximum stock levels. On a periodic basis throughout a given day, the seller may communicate with the third party provider to move material from the hub to the plant (a JIT arrangement). On a weekly or monthly basis, the seller may send a forecast to the suppliers. The suppliers are then responsible for maintaining inventory within the negotiated levels at the hub using this daily product movement and forecast information.
Although these various replenishment processes provide adequate inventory management, problems arise when multiple entities are involved in a value chain and especially when these multiple entities carry out different types of replenishment programs between one another.